Stamp duty slated as "a tax on development, not on wealthy buyers"

Property consultancy Arcadis, which monitors construction and development around the world, wants Chancellor George Osborne to offer temporary stamp duty relief to new build homes in London.

It says those planned before stamp duty was radically restructured in December 2014 should be exempt because demand has plummeted from wealthy buyers for those units attracting much more duty than before.

In its latest Prime Residential Pipeline report Arcadis says developers’ margins have been hit by as much as four per cent on ‘prime’ homes and by up to seven per cent on ‘super prime’ homes.

The call for exemption - made by Mark Cleverly, head of commercial development at Arcadis - was accompanied by his comment: “Stamp duty is becoming a tax on development, not on wealthy buyers.”

He adds: “The Chancellor has to act on prime property tax. Despite initially encouraging investment in prime housing, the government since changed its mind and attempted to stem demand through ongoing tax increases and new fiscal regulations.

“This has prompted a drop in buyer interest at the very top of the market, creating a big problem for developers who had already committed to schemes and meaning affordable housing allocations are not delivered.” 

In recent months there have been many industry and mainstream media stories about a slump in demand for prime central London properties in particular, exacerbated by investors sitting on their hands ahead of the EU referendum. 

Arcadis warns that some developers are delaying construction of long-agreed schemes, or altering plots, footprints and specific unit sizes to take account of the higher duty and lower demand.